If there was a godfather of social networking, Reid Hoffman’s name would be near the top of the list. Hoffman co-founded professional social network LinkedIn (LKND) and was an early investor in Facebook (FB) when it was only worth $5 million.

It’s not surprising that he’s looking for ways to add social networking to the venture capital world. Greylock Partners, the firm where Hoffman is an investment partner, recently launched a series of networking events called Communities to scale professional networking in Silicon Valley.

We sat down with Hoffman to talk about Silicon Valley’s growth explosion, unicorns, the state of valuations and a sector he’s particularly focused on, bitcoin.

(This interview was edited for length and clarity)

Q: Is the scale that Silicon Valley has achieved, with the massive amount of companies being built, good for the ecosystem overall?

Hoffman: Unequivocally yes. It’s not to say that there isn’t a bunch of noise, like an app launching for counting Tiddlywinks or something. That always happens when the breadth of things gets larger. But the number of legitimate globally transforming companies that we are creating at this tempo is basically unmatched in history. If you look globally, the only place that where that is also happening is China.

It would still be good if Silicon Valley were twice as big or three times as big. One could have a thesis to say, ‘Well, actually there’s only a limited amount of game changing ideas, so the noise is growing massively more than interesting ideas.’

But that actually gets back to kind of my view of unicorns [private companies valued at more than $1 billion], which is if there is a herd of unicorns then it’s not a unicorn. The whole idea of unicorns is having one.

Q: Do we need to a new name for these $1 billion plus tech companies other than unicorns?

A: I think that part of it is that we’ve built up expertise about how to build massively transforming companies and it’s actually not accidental. It’s a strong and healthy byproduct of the network in Silicon Valley, and that’s actually a really good thing. It does creates tension and wealth inequality and those are legitimate things that need to be paid attention to and worked on. But it creates a vast amount of prosperity overall in Silicon Valley.

It also creates transformative systems in the world. Airbnb is the way the world should be. The world should exist that way, and that’s a great thing. And creating more of those is actually in fact not just good for us, but good for everybody.

Q: Are we in unicorn overload?

A: The question also is are there frothy valuations. The thing that people under attribute in the networked age we have many more customers, and the ability to grow, the ability to make a startling business is happening very quickly. The combination of those things make the fast growing companies really interesting right now. And that sets a bar for how valuations are constructed, and what ends up happening is that you get a lot of investments at high valuations, so it looks frothy. But only some of those companies will be massively disrupting, and will be industry creating and transforming.

What you have to be careful of is treating non-industry transforming companies like they are disruptive and valuing them like they are. When investors are exuberant and happy, undoubtedly some of those rounds start happening.

Q: How do you maintain investing discipline in the current venture capital environment?

A: We have a promise to ourselves, to our LPs [those who give Greylock to invest], to our entrepreneurs, that we select the projects, the entrepreneurs that have the chance of being an industry-defining company — a company that lasts for decades, hopefully centuries. We all have to collectively work towards that. And sometimes it doesn’t work. It’s a venture bet.

But to do that, because the system has grown, you have to be discriminatory. To have to be selective. You have to say, “Look, it has to be a really interesting project, a great entrepreneur, the right kind of timing this will work.” Even though you add things to a company like network effects, communities, and talent to help companies, you also need to have a venture partner who really partners with an entrepreneur and a CEO and says, look, “I am personally working with you on that.” And you can only do a couple of those deals a year. So you have to be very selective to which are the ones that will have the possibility of doing a massive transformation in the world. And while you want the social transformation, we’re also in the business of creating great businesses, too.

Q: Is there one top of mind that comes to you that you’ve done recently that fits that description?

A: Well, the last deal that I’ve done I think fits is still under stealth.

Q: Okay, what about one that is public?

A: Xapo [Xapo is a Greylock-backed company that has created a digital wallet for bitcoin]. My theory of why bitcoin is interesting is that there will almost certainly be in 10 years there will be one or more global crypto currencies that will either be bitcoin or bitcoin-derived.

Based on that theory, I did two investments. One from Greylock because that Xapo is a standard business built on bitcoin.

And then the other one is a technology layer, called Blockstream [Blockstream is creating technology to extend bitcoin’s functionality into things like stock trades or contracts]. I did this one personally through my foundation to essentially to say, “let’s make bitcoin be possible.”

Now, is bitcoin going to be great or not? I don’t know. I think the least interesting question about bitcoin is the current price. The most interesting thing about bitcoin is that it’s an open platform the way the Internets are an open platform, but for financial systems.